Blockchain is the most significant technology advancement since the inception of the internet. In fact, it’s capable of cleaning up many of the privacy, information security, regulatory, supply chain, and integration issues we struggle with. Blockchain will inevitability transform the way we share information and manage assets while simultaneously providing new levels of trust and security.
But like any major change, blockchain poses a threat to many existing business models. Like the internet in the 1990s, it will alter every industry—but financial services, real estate, healthcare, law, and insurance are those most immediately poised to feel the effects.
If blockchain is touted as a transformative solution to myriad issues, why do you hear so many banking and credit card executives being critical of it? You may hear comments, for example, that blockchain is:
- Not ready
- Too volatile
- Doesn’t scale
- Not safe
- Requires too much energy
Banking executives have even stopped saying the word “blockchain” in their earning calls (CBinsights). The word “blockchain” has become taboo.
The irony is that the banks and credit card companies which these executives represent are:
- Working with other banks to define blockchain standards
- Investing in blockchain ventures
- Partnering with other banks on blockchain initiatives
- Joining blockchain consortiums
- Purchasing cryptocurrencies
- Even releasing their own coins!
It was not long ago, that Fintech’s emphasized the word “blockchain” in a venture capital proposal. Now even Fintech’s have even stopped saying “blockchain.” While watching a Fintech demo in Silicon Valley, I could tell from the very first slide that blockchain would be a perfect solution for the integration nightmare they were describing with their clients. As the presentation continued, it appeared they were using an immutable decentralized ledger and secure contracts, but still no blockchain reference.
Maybe blockchain has become taboo because of its association with Bitcoin and its subsequent association with money laundering and ransomware. Additional governance of cryptocurrencies is needed, but those blockchain features (i.e. cryptography & zero-knowledge proofs) that allow people to transact anonymously are the very same features that can help solve the privacy issues (i.e. GDPR, CCPA) we are struggling with.
Good ideas always seem to prevail eventually. Blockchain is currently being used by banks for international payments to eliminate the need for correspondent banks and with some insurance companies to regain funds from liable parties in an insurance claim (i.e. subrogation). The blockchain concepts outlined in the Satoshi Nakamoto 2008 paper will continue to change the world even if the word “blockchain” becomes taboo.